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Qihoo 360 to acquire Sogou through share-swap deal: reports

Staff Reporter

2013-05-12

09:11 (GMT+8)

An ad for popular Chinese search engine Sogou. (Photo/CFP)

Chinese security software company Qihoo 360 is said to be planning to buy the search engine company Sogou for US$1.4 billion. Sogou CEO Wang Xiaochuan has refuted rumors about the deal on his microblog but many investors believe talk of a takeover to be credible given the several recent mergers among China's leading internet companies.

E-commerce giant Alibaba Group acquired an 18% stake in the Twitter-like Weibo microblogging service owned by Sina this month while iQiyi.com, an online video website under the auspices leading search engine Baidu, recently acquired internet TV system PPS for US$370 million.

Qihoo 360 chairman Zhou Hongwei and Sogou's Wang are said have been in talks and met in secret several times. Their negotiations on a deal are said to be almost completed and the two companies may ink a formal contract in the near future, according to reports. Under the deal, Qihoo 360 would swap shares worth US$1.4 billion with Sogou to acquire the search engine firm. Sogou's parent company Sohu will thereby obtain a 30% stake in Qihoo 360 worth US$4.5 billion, according to our Chinese-language sister paper Want Daily.

Although Wang has refuted the rumors, many market observers are giving the reports credence after the Alibaba-Sina deal and other acquisitions. Qihoo 360 and Sogou are the second and third most popular search engines in China at present. Thei merger would boost their internet search and browser market share significantly in the short term.

Analysts warn however that the two have very different cooperate cultures and have expressed concern over the restructuring and cultural differences that could follow a merger.